Nigeria banking reforms end in sight?

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In August, the Central Bank of Nigeria (CBN) governor, Lamido Sanusi, again moving with the speed and agility that has characterised his tenure during one of the most difficult periods in Nigeria's banking history, revoked the licences of three banks--Afribank, BankPHB and Spring Bank. The banks were given until 30th September to recapitalise or be liquidated.

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Simultaneously, the Nigeria Deposit Insurance Corporation (NDIC) through the 'Bridge Bank' mechanism nationalised and assumed ownership of the banks, under new names and management. The Asset Management Corporation of Nigeria (AMCON), the new owner, is to manage them for the next two to three years, until new investors are found. AMCON, in turn, injected N679bn ($4-3bn) into the banks, to bring them to the correct capital adequacy level after changing their brand names to Mainstreet Bank (Afribank), Keystone Bank (Bank PHB) and Enterprise Bank (Spring Bank).

Mainstreet Bank received N28sbn ($i.8bn) to bring it to over 15% capital adequacy and a minimum of N25bn ($i58m) capital base; Keystone Bank N283bn ($i.8bn) and Enterprise Bank received Nmbn ($705111). All these transactions were concluded within three days.

The swiftness with which the changes oc-curred was likened by shareholders' groups and stakeholders as a 'coup d'etat' on investors. But the regulators were said to have weighed the impact the unresolved banks are likely to have on the economy and decided a timely action was required. The nationalisation of these banks has therefore closed the circle on a two-year process that started when the CBN commenced its reforms.

The CBN deputy governor, Financial System Stability, Kingsley Moghaiu, said the apex bank revoked the operating licences of the banks because there was nothing on the ground to show that they would attract investors before the expiration of the ultimatum. He noted that to ensure public confidence in them, the apex bank has extended interbank guarantee to them. This move, according to Renaissance Capital, an investment firm based in Lagos, has brought down the curtain on the resolution process for the intervened banks.

The final picture shows five banks, Oceanic Bank, Intercontinental Bank, Finbank, Equitorial Trust Bank and Union Bank of the original eight distressed banks signing agreements with new investors. Two others, Unity Bank and Wema Bank have since recapitalised.

AMCON's role

The managing director/CEO, AMCON, Mustafa Chike-Obi...

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